The major stock market indexes have exhibited wild price swings since the beginning of the year due to multi-decade high inflation and the Fed’s forthcoming interest rate hikes. The Russia-Ukraine war has added to investors’ concerns and led to several market sell-offs of late.
Russia has been subjected to numerous sanctions by several countries, with the United States and the United Kingdom this week announcing bans on Russian oil imports. Despite declining more than 12% from its peak yesterday, the increase in crude oil prices has come as a blow to the economic recovery. Given this scenario, investors could bet on shares of defensive companies because of the near-inelastic demand for their products and services. These stocks usually withstand market shocks and deliver steady returns.
CVS Health Corporation (CVS), Becton, Dickinson, and Company (BDX), Colgate-Palmolive Company (CL), Smith & Nephew plc (SNN), and Ingredion Incorporated (INGR) possess solid fundamentals and they are defensive in nature. So, we think these stocks could be good picks to hedge one’s portfolio against current market volatility.
CVS Health Corporation (CVS)
CVS in Woonsocket, R.I., is a health services company. It operates through the Pharmacy Services, Retail/LTC, Health Care Benefits, and Corporate/Other.
On Dec. 2, 2021, CVS announced a strategic alliance with Microsoft Corporation (MSFT) to develop innovative solutions to help consumers improve their health. The collaboration with MSFT should enable CVS to accelerate a data-driven, personalized customer experience while complying with the company’s policies on patient privacy and confidentiality.
CVS’s total revenues increased 10.1% year-over-year to $76.60 billion for the fourth quarter, ended Dec. 31, 2021. The company’s adjusted operating income increased 40.8% year-over-year to $4.14 billion. Also, its adjusted EPS came in at $1.98, representing a 52.3% increase year-over-year.
Analysts expect CVS’ EPS for its fiscal year 2023 to increase 8.3% year-over-year to $8.97. Its revenue for the quarter ending March 31, 2022, is expected to increase 9.9% year-over-year to $75.13 billion. And it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 45.4% in price to close the last trading session at $103.60.
CVS’ strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Growth, Value, Stability, and Sentiment. Within the A-rated Medical – Drug Stores industry, it is ranked first out of four stocks. To see the other ratings of CVS for Momentum and Quality, click here.
Becton, Dickinson and Company (BDX)
BDX is a medical technology company that develops, manufactures, and sells a range of medical supplies, devices, laboratory equipment, and diagnostic products. The Franklin Lakes, N.J., company operates through the BD Medical; BD Life Sciences; and BD Interventional business segments.
On Dec. 21, 2021, BDX announced the acquisition of smartphone-enabled at-home medical tests company Scanwell Health Inc. President of Life Sciences for BD, Dave Hickey, said, “This acquisition will enable us to expand and scale our digital capabilities in-house to speed time to market for transformative at-home solutions now and in the future.”
For its fiscal first quarter, ended Dec. 31, 2021, BDX’s BD Medical’s revenue increased 6% year-over-year to $2.39 billion, while BD Interventional’s revenue increased 3.7% year-over-year to $1.11 billion. Also, its cost of sales declined 0.4% year-over-year to $2.57 billion. In addition, its adjusted EPS came in at $3.64, representing a 20% decrease year-over-year.
For the quarter ending June 30, 2022, BDX’s EPS is expected to increase 10.2% year-over-year to $3.02. The company’s revenue for its fiscal year 2023 is expected to increase 4.5% year-over-year to $20.57 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 9% in price to close the last trading session at $264.84.
BDX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has a B grade for Growth and Stability. Within the Medical – Devices & Equipment industry, it is ranked #35 of 168 stocks. To see the additional ratings of BDX for Value, Momentum, Sentiment, and Quality, click here.
Colgate-Palmolive Company (CL)
New York City-based CL is a household and consumer products company. It operates in the Oral Personal and Home Care, and Pet Nutrition segments. The company’s Oral, Personal, and Home Care segment sells products that include liquid hand soap, shampoos, and deodorants through Palmolive, Protex, Ajax, Axion, and Softsoap. The company also manufactures pet nutrition products for dogs and cats through Hill’s Pet Nutrition segment.
On Jan.24, 2022, CL and 3Shape announced that they were partnering to introduce Colgate Illuminator, an exclusive, tailored-to-patient teeth whitening tool, to dental clinics across the U.S. This new tool should help deliver an improved patient experience by enabling more accurate consultations.
CL’s net sales increased 2% year-over-year to $4.40 billion for the fourth quarter, ended Dec. 31, 2021. The company’s selling, general and administrative expenses decreased 2.1% year-over-year to $1.59 billion. Its total debt for the fiscal year ended December 31, 2021, fell 4.6% year-over-year to $7.24 billion.
Analysts expect CL’s EPS and revenue for its fiscal 2023 to increase 8.1% and 3.9%, respectively, year-over-year to $3.59 and $18.57 billion. Over the past year, the stock has gained 0.8% in price to close the last trading session at $75.54.
CL’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Stability. It is ranked #13 of 63 stocks in the Consumer Goods industry. Click here to see the other ratings of CL for Growth, Value, Momentum, and Sentiment.
Smith & Nephew plc (SNN)
Headquartered in Watford, U.K., SNN is a medical technology company that designs and manufactures technology. It supports healthcare professionals to return their patients to health and mobility by helping them perform. It serves its customers through global franchises that include Orthopaedics, Sports Medicine and Ear, Nose and Throat, and Advanced Wound Management.
On Jan. 19, 2022, SNN announced the acquisition of Engage Surgical, the only cementless unicompartmental knee system commercially available in the U.S. The acquisition bodes well for SNN because it supports its strategy for growth by transforming its business through innovation and investment and providing differentiation for its customers.
For its fiscal fourth quarter, ended Dec. 31, 2021, SNN’s revenue increased 1.5% year-over-year to $1.34 billion, while its revenue for its fiscal year 2021 increased 14.3% year-over-year to $5.21 billion. The company’s trading profit for its fiscal 2021 came in at $936 million, representing a 37% increase year-over-year.
For its fiscal year 2023, SNN’s EPS and revenue are expected to increase 18.8% and 5.5%, respectively, year-over-year to $2.01 and $5.70 billion. Over the past three months, SNN has declined 2.5% in price to close the last trading session at $31.89.
SNN’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Stability, and Quality. Within the Medical – Devices & Equipment industry, it is ranked #4. To see the other ratings of Momentum and Sentiment, click here.
Ingredion Incorporated (INGR)
INGR provides food and industrial ingredient solutions to customers worldwide. The Westchester, Ill.-based company is principally involved in producing and selling starches and sweeteners for a range of industries and is managed geographically on a regional basis. Its segments include North America, South America, Asia-Pacific, Europe, the Middle East, and Africa (EMEA). Also, its product lines include starches and sweeteners, animal feed products, and edible corn oil.
On Feb.9, 2022, INGR announced a new equity investment in InnovoPro, a leading food tech chickpea solutions company. Michael Natale, global leader of INGR’s plant-based protein platform, said, “We believe this investment will unlock huge consumer appeal for chickpea protein concentrates. InnovoPro has a strong portfolio of chickpea solutions, and we are excited about the potential for the new applications that this will enable for our customers by capitalizing on the trends shaping the food industry.”
INGR’s net sales for its fiscal year 2021 increased 15.1% year-over-year to $6.89 billion. The company’s adjusted operating income increased 3.9% year-over-year to $685 million. Also, its adjusted EPS came in at $6.67, representing a 7% increase year-over-year.
Analysts expect INGR’s EPS for its fiscal year 2023 to increase 10.7% year-over-year to $7.86. Its revenue for its fiscal year 2022 is expected to increase 9.4% year-over-year to $7.54 billion. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past six months, the stock has gained 0.2% in price to close the last trading session at $86.49.
INGR’s strong fundamentals are reflected in its POWR Ratings. The company has an overall B rating, which translates to a Buy in our proprietary rating system.
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CVS shares were unchanged in premarket trading Thursday. Year-to-date, CVS has gained 0.96%, versus a -10.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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